Yellen is breaking with the White House and says raising the debt ceiling on a party-line basis should be on the table.
She said she didn’t want to “play chicken” with the economy.
Yellen’s comments may add momentum to a Democrat-only approach to lifting the borrowing cap.
Treasury Secretary Janet Yellen broke with the White House and said Democrats should consider lifting the debt limit on their own, arguing unilateral action was a “viable” route to stave off financial catastrophe.
“Should it be done on a bipartisan basis? Absolutely,” Yellen told The Washington Post’s Jeff Stein. “Now, if they’re not going to cooperate, I don’t want to play chicken and end up not raising the debt ceiling. I think that’s the worst possible outcome.”
Yellen’s comments mark a big shift in her position from the summer on the debt limit, the legal limit that the US can borrow to repay its bills. Throughout a recent standoff over the debt ceiling, the treasury secretary insisted that it should be raised with Republicans’ support. Senate Democrats shared that view as well and they strongly dug in against unilateral action.
But the Senate GOP spearheaded by Senate Minority Leader Mitch McConnell is doubling down against lending any backing to help Democrats increase the borrowing cap. Senate Republicans, including McConnell, paved the way to lift it earlier last month, but he warned soon after that it won’t happen again.
“I will not be a party to any future effort to mitigate the consequences of Democratic mismanagement,” the Kentucky Republican wrote in a fiery latter to Biden. “Your lieutenants on Capitol Hill now have the time they claimed they lacked to address the debt ceiling.”
The White House did not immediately respond to a request for comment.
The Treasury Department estimates that the US has until Dec. 3 to act, though some experts say the federal government has some room beyond that. Economists say that breaching the debt limit would prompt financial chaos that could lead to a recession with massive job losses and major cuts to federal aid like Social Security checks.
Yellen also reiterated her support to abolish the debt ceiling to the Post. “It is my view – it’s not the White House view; it’s not the president’s view; they haven’t weighed in on this – but I personally feel we should not have a debt ceiling,” she said.
The White House has ruled out what they view as out-of-the-box approaches like minting a $1 trillion coin that Treasury could theoretically mint and deposit at the Federal Reserve.
Some Democrats are pushing to scrap the debt ceiling, arguing that what used to be a procedural tool has been weaponized to push the US to brink of default.
“There’s more interest than I’ve ever seen in getting rid of it,” Rep. Donald Beyer of Virginia, a member of the tax-writing House Ways and Means Committee, told reporters on Thursday.
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